In a press release earlier this week, Bloomberg New Energy Finance (BNEF) has come out with a bullish prediction for returns under Japans new clean energy policy which will come into effect July 1. The feed in tariff (FIT) rates that have been proposed in the policy, according to BNEF: "Will rank among the most attractive support mechanisms for renewables."
Japan has long bee pursuing a path away from carbon-based energy sources, but since the Fukushima-Daiichi nuclear disaster of 2011, this path has taken a sudden turn towards renewable energy sources. Only yesterday, pv magazine reported that all but one of Japans nuclear reactors have been switched off, for maintenance, testing or indefinitely.
In what could scarcely be believed only months ago, Japan looks set to head into a summer with very little nuclear capacity. Andrew DeWit from Tokyos Rikkyo University told pv magazine last month that the stage has been set for renewable energy to take off in Japan.
pv magazine also reported from the trade-show floors at PV Expo Japan late last month that record visitor numbers had also indicated this.
In this environment and with the FITs proposed, BNEF predicts that returns, "As high as 44 percent and 51 percent respectively," could be reaped by investors through renewable projects, including phototovltaics. As such, BNEF predicts Japan to see 20 gigawatts (GW) of renewable capacity added by 2014. This would total an investment of US$37.5 billion over the next three years at present costs.
As costs fall however, BNEF predicts, "accelerating renewable deployment across the country despite aggressive reductions in the very generous initial tariffs on offer."
Adding a cautionary word, BNEFs Yugo Nakamura, head of Japan research, said that if high rates are put in place, a boom and bust cycle could develop.
Notwithstanding this, BNEF predict that Japan has the potential to become the third largest photovoltaic market by 2014.